ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

Following last Wednesday’s accelerative declines, U.S. stock markets began a counter-trend rally late-session rolling into Thursday and initially sparked by some better economic news – September industrial production was up +1% per cent, with a slight improvement from the Philly Fed's manufacturing index showing a steady October figure of 20.7 vs September's 22.5. Additional upside momentum continued into Friday as dovish comments from James Bullard, the president of the St. Louis Fed was found favouring a delay in ending the Central Bank’s bond-purchases. The S&P’s low at 1820.66 completed a 3rd-of-3rd-of-3rd wave low with the subsequent rally unfolding### into a 4th wave correction. Late-session Friday, this upswing had already recovered into the fib.50% retracement zone at 1895.00+/-, a probable end to the correction with a high risk that prices are set to resume lower. The Elliott Wave model describes the S&P within a five wave declining pattern that is so far, incomplete with downside targets to 1784.21, max. 1747.00 and so the current rally is seen as just a temporary phase before prices resume lower this coming week. The small-cap Russell 2000 is edging closer to its corrective upside targets and this is also replicated in the Nasdaq 100. In Europe, our benchmark Eurostoxx 50 index has recovered well from last week’s sell-off low but like its U.S. counterparts, is engaged in a counter-trend upswing – resistance is towards the 2970.00+/- level. The Xetra Dax is heading for upside resistance towards 8850.00-8915.00+/-. Meanwhile, Asian stock markets have withstood a lot of the downside pressure exerted from western indices with the Hang Seng hooding up pretty well although it still remains within a multi-month declining counter-trend pattern that began from the Sep.’14 highs. The Nikkei is posting some short-term gains but the overall declining pattern remains very bearish with downside targets below 12000.00. Australia’s ASX 200 has completed five waves down from its August high with last week’s corrective rally already trading into minimum upside levels – this index is now at high risk of another accelerative decline. 20th October 2014

Financial Updates Currencies

Currencies (FX)

The US$ dollar registered an ‘overbought’ signal at the beginning of October when it traded to a high of 86.74 but its subsequent decline to 84.47 has already balanced this entirely. The decline has a little more to do in the coming week, but by then, momentum indicators will enter ‘oversold’ territory. Meanwhile, the Elliott Wave Principle has identified this decline as simply a counter-trend phase in its larger five wave advance that began from the May ’14 low of 78.90. Once the decline has completed, another sequence of US$ dollar buying is expected to lift levels above the current highs en-route to our ultimate upside objectives at 88.80+/-. ###The Euro/US$ has responded well to the upside since forming a temporary low at the beginning of October at 1.2500. It has so far climbed up to 1.2888 and has the potential to add a little further to this gain during the coming week, towards 1.2958-98 but there is heavy overhead resistance at these levels, and we expect the Euro/US$ to be repelled and then resume lower afterwards – ultimate downside targets remain towards 1.2396-1.2184+/-. Stlg/US$ dollar is working its way lower from its July high of 1.7192 into a double zig zag pattern – a temporary rally has begun to lift levels from last week’s low of 1.5875 and this is expected to continue to 1.6275+/- before continuing lower afterwards. The US$/Yen changed direction at the end of September, forming an important high at 110.08 that ends the entire uptrend that dates back to its origins in Nov.’11, the pre-Abe period when it was forming a low at 75.56. A multi-month decline is forecast but a shorter-term upswing is positioning for a rally towards 107.61+/-. 20th October 2014

Financial Updates Bonds

Bonds (Interest Rates)

Long-dated bond yields are now in a state of flux, a limbo period awaiting confirmation of prevailing trend. Last week’s sharp declines have exposed the dealer-books of the banks where expectations of Federal Reserve monetary tightening was translated into higher yield forecasts. But with Europe’s ECB fighting deflationary forces ###and peripheral European interest rates climbing higher, especially those of Greece with 10yr yields heading towards 8% per cent, there is now a contagion fear that treasury yields could also plummet as safe-haven buying pulls yields to historical lows, widening spreads in the process. There is key level resistance for the US10yr yield at 2.250% but the more important levels develop from the recent decline from 2.655% and last week’s low at 1.912%. A break out of this range would either confirm yield declines to a new historical low that forms into year-end, below the existing July ’12 low of 1.377% per cent, or alternatively, a break above 2.655% would trigger a surge higher that during the next 12 month period aims towards 4.97% - take your pick! In Europe, the DE10yr bund yield has bounced higher from last week’s low of 0.666% but this is seen as an Elliott Wave corrective 4th wave with upside limits into next resistance at 0.910%. We maintain an ultimate downside target towards 0.536% per cent before concluding the long-term downtrend. 20th October 2014

Commodities

Precious metals are finding some safe-haven buying as global stock markets decline and this was evident last week when the S&P index accelerated rapidly by falling -3% into last Wednesday’s low. Gold correspondingly swing higher from a session low of 1222.00 to a high at 1249.75. But as stock markets began to recover into Thursday/Friday, gold and silver paired back some of those previous gains with a retracement to 1231.85 and 17.20. If this negative-correlation game continues, and the stock market resumes lower as we expect, then it remains possible that gold and silver will continue to attract buyers, especially since gold has once again held important support earlier in the month at a triple-low of 1180.00+/-. ###There is now reason to believe that gold and silver are set to embark on a more sustainable rally, although we still maintain this would translate into another counter-trend pattern within a dominating downtrend still in progress from the year-2011 highs. The triple-low for gold at 1180.00+/- would represent the horizontal lows of a multi-year descending triangle pattern – the next and final sequence would require gold trading higher during the next couple of months towards min. 1307.65, max. 1338.68. This wave count remains under review, but should silver suddenly awaken from its slumber, breaking above last week’s highs of 17.82, then this too would confirm additional gains, in this case, towards 19.25+/-. All depends on how anxious traders become during the next stock market sell-off. Meanwhile, crude oil continues lower but adhering closely to the current Elliott Wave rhythms of a declining five wave impulse pattern in downward progress from the Aug.’13 high of 112.24. For the last few months, using fib-price-ratios, have measured an ultimate target towards 77.28, a revisit to the June ’12 lows as the concluding sequence of a multi-year horizontal flat pattern. But the development of a necessary five wave pattern into this area seems too tight, and so in our latest update, have lowered levels to either 70.42 or max. 67.77 as part of a ‘slanting-flat’ pattern (R.N.Elliott, 1938). This seems extreme, but the high positive correlation of stock markets, and downside projections that linger into year-end hold such levels for crude oil as attainable. 20th October 2014

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

PRODUCTS & SERVICES

EW FORECASTS

Our Flagship Institutional Service updating multiple time-frames across all asset classes...

Live Update FORUM

A unique advisory service that links you 'Live' in a private online meeting room with our analysts...

WTI Alerts

'Register' now and receive the latest EW-Product-Alerts via e-mail with updates for WaveSearch & up-coming tutorials and seminars.

TESTIMONIALS

"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES